Central Bank chief sees environmental issues affecting financial flows
In an interview with Valor, Central Bank President Roberto Campos Neto said that part of the industry continued slowing down in the last quarter of 2019. "In the fourth quarter there was some volatility, there were people thinking it would have 1% growth. Now [the estimates] are lower, 0.6% to 0.7%," he said.
"We target a little more the long term. [The monetary policy] has effect in six, seven, eight months. So even if my monetary policy is much more potent, it doesn't mean it will have a much more immediate effect. It means it will have a more lasting and bigger effect," he stressed. "So the gap continues, there is always an element of uncertainty that we will analyze."
In spite of the volatility in market expectations, the Central Bank (BC) has not changed its forecast of growth for this year, of 2.2%.
Regarding inflation, which accelerated to 4.3% last year because of rising meat prices, he believes it is a shock that will dissipate quickly. "We can see the meat price falling a lot and remain calm with our projections, as it has been indicated in our several reports," he said.
Mr. Campos argued that the price shock experienced in late 2019 did not change price trends for 2020. He also said that core inflation figures, which exclude more volatile products from calculations, like agricultural ones, did not fluctuate steeply. The market interpreted his statements as a sign there is room to cut policy rate Selic.
The BC president also said that environmental discussions already are affecting global financial flows, an aspect that is critical for Brazil. He warned that large international investors already started demanding a kind of "environmental stamp" from countries.
Excerpts from the interview:
Valor: How do you explain the frustrating year-end activity indicators?
Roberto Campos Neto: We didn't think there would be intense and fast growth.
Valor: Why?
Mr. Campos: Because we had a long work of micro-reforms to improve the allocation of resources. We are coming from ten years of bad and inefficient allocation in the economy. And the best allocation doesn't come overnight. In the fourth quarter, part of the industry slowed down. Those doing the math in detail are adjusting growth a little [downward].
Valor: Will the BC also adjust its expectations for 2020?
Mr. Campos: The optimist sees the GDP growing 3% and the most pessimist, 1.5%. We have 2.2%. We are more concerned with sustained growth and not whether we will grow 2% or 3%. We are making a reinvention of growth with private-sector money. This is an important message.
Valor: It is a new world for the country, where the public money always played a relevant role.
Mr. Campos: Interest rates [Selic at 4.5%] are a new world, in addition to the pro-market economic plan. In the second half of 2019 private-sector growth was slightly above 2%. The world's economy is not helping much, but Brazil growing faster than Latin America is something we had not seen for years. We must target the sequence of reforms and transformation of the economy, rather than being worried with the growth of one year alone.
Valor: Where there may be transformation that accelerates the expansion?
Mr. Campos: Real estate is a way of generating wealth in the economy without generating costs.
Valor: In what way?
Mr. Campos: When we look at the stock of commercial and residential properties of capital cities, it is worth R$12 trillion to R$13.6 trillion. But the volume of financing is only R$500 billion. Therefore, a large part of this stock is already paid. So, the issue is how to use this stock of capital. I need to have a market in which money circulates in the economy. In the other countries, they did securitization. Here, we did home equity. You take the entire cycle and produces effect in the boom of construction. Our microeconomic programs are pieces that fit. We need to put prices and market in things. The private-sector debt has some imperfections. You need to attack the bureaucracy for investors to buy back the...
Para continuar a ler
PEÇA SUA AVALIAÇÃO